Inflation spiked to 2.3 per cent in October as fears grow over the impact of the Budget, Ukraine war and global trade tensions.
Rising energy price were the biggest factor behind the bump in the headline CPI rate from 1.7 per cent in September.
But the increase – back above the Bank of England’s 2 per cent target – fueled nerves as it came in slightly above the 2.2 per cent markets were anticipating.
The effects of the huge borrowing and spending splurge by Rachel Reeves have also yet to feed through into the statistics.
There are jitters about Donald Trump’s vow of imposing sweeping tariffs on imports to the US when he re-enters the White House in January.
Meanwhile, energy costs remain volatile with the Ukraine war entering a crucial phase.
In October, average household energy bills increased by £149 a year after regulator Ofgem raised the cap from £1,568 for a typical dual fuel household in England, Scotland and Wales to £1,717. That represented a roughly 10 per cent rise.
ONS Chief Economist Grant Fitzner said: ‘Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity compared with a fall at the same time last year.
‘These were partially offset by falls in recreation and culture, including live music and theatre ticket prices.
‘The cost of raw materials for businesses continued to fall, once again driven by lower crude oil prices.’
As it mulls more interest rates cuts, the Bank of England could be worried that closely-watched core CPI – excluding energy, food, alcohol and tobacco – rose 3.3 per cent in the 12 months to October.
That was up from a rate of 3.2 per cent in September. The annual CPI rate for goods increased from minus 1.4 per cent to minus 0.3 per cent, and services CPI was up from 4.9 per cent to 5 per cent.
Chief Secretary to the Treasury Darren Jones, said: ‘We know that families across Britain are still struggling with the cost of living.
‘That is why the Budget last month focused on fixing the foundation of our economy so we can deliver change.
‘That includes boosting the National Minimum Wage, freezing fuel duty and protecting working people’s payslips from higher taxes.
‘But we know there is more to do. That is why the Government is focused on economic growth and investment so we can make every part of the country better off.’
Shadow chancellor Mel Stride said: ‘Having brought inflation back down to target, we know how important it is for all of us that the government does the same.
‘What is worrying about today’s announcement is that inflation is running ahead of expectations and official forecasts state these figures are not expected to improve. Labour’s Budget will push up inflation and mortgage rates.
‘It’s higher inflation and lower growth under Labour.’